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tv   Bloomberg Markets European Open  Bloomberg  February 10, 2020 2:00am-4:00am EST

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>> good morning, welcome to bloomberg markets. i am anna edwards alongside matt miller in berlin. >> today the markets say whether the storm. futures start off on the back foot. the cash trade is an hour away. ♪ the tip of the iceberg, the who
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warns that the coronavirus outbreak could get much worse as the number of deaths exceeds the total from sars. risk assets retreat, stocks start the week on a down week as wti crude covers around $50. opec says an extraordinary meeting is unlikely. a bloomberg exclusive, french insurer cobia is in advanced talks to buy the agnelli billion business for $9 in cash. it would be a big payday. we are under an hour away on the trading insh equity europe. futures trading down in terms of equity futures. in europe, after a bit of a drop in stocks at the end of the week last week, last week was a good week for stocks in general. for the s&p 500, it was the best in eight months. u.s. futures are going up.
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they had a nasty friday but looks like investors are willing to bet on the futures monday morning. s&p futures are up .2%. interesting to see those futures moving higher. it did select the ability to get -- seem the ability to get back to work in china lifted futures. the asian session still under pressure. territory, negative the markets on the far side that are falling today. continuous reassessment by investors and economists of what the coronavirus will do. we will keep an eye of the tollcally climbing death and also asking questions about what this does for the global economy. we hear talk about the tip of the iceberg from the who and ask how that contrasts with infection numbers.
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lots of questions about the underlying reality of what is going on. we did have the australian dollar rising after we saw a new decade low for that currency, repositioning around that in the markets. this week will be busy on a host of fronts. the coronavirus, profitability at various businesses and the micro accounts maybe of supply chains and retail sales, other factors economists are keeping an eye on in china. we will look at u.s. inflation. a couple of headlines, one on nmc health, the have received a culinary approach from two companies in the united kingdom, the subject of interest of activist investors. that sent their share price all over the place. we hear that they are the subject of a private approach from -- interesting also getting
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properties.ith into a couple of things to keep an eye on at the start of the london trading day. the global death toll from the coronavirus outbreak has 40,000 910 with over confirmed infections in china. cases traced to a business meeting in singapore have reached three european countries, reaching fears of a super spreader event. the director general voiced concern among people with no travel history to china. he said we might be seeing the tip of the iceberg as we have been telling you. bloomberg anchor rishaad salamat joins us now. tell us about the meeting which seems to have had global ramification and what a super spreader is. rishaad: you go to a meeting
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which has been attended by 90 foreigners at a hotel at the end of january and you mingle and do what is the norm at a meeting. you go to a french ski resort and what happens is there is suddenly three cases in britain, spain and france, and you have got spreading going on as well. it is also a factor in malaysia, people and representatives at that meeting, they have gone back home and contracted a disease. that is super spreading. that is what it is about at the end of the day, can you contain it and containment is the essence. it is reminiscent of the sars virus in 2003. one doctor looked -- left the country and suddenly you had multiple cases down to one person. there is no definition of a super spreader, but it is someone who leaves a venue and then manages to spread it in the
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host country he is in. in this case it was a french ski resort. we have this briton who managed to infect one spaniard, one frenchman and another briton. that is what happened there. it tells you about how global, the global economy is so intertwined and populations, something so domestic can go exponentially international. anna: from a markets perspective, keeping an eye on what the pboc is doing. rishaad salamat joining us with the latest on the coronavirus and what is happening in the region. let's get to the markets now. laura is here with us in london. let's talk about where we left off the conversation. the question of the day is around the pboc and what the pboc is doing, what they could be doing, are they doing enough? the pboc and their liquidity
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injections announced in the short-term. >> and aggressive amount of liquidity injection is helping to prop up risk sentiment. we are sinuous equities futures in the green -- u.s. equities futures in the green. there is significant and but -- economic impacts that could still lie ahead. really it is the fed this week that will garner the most attention because on friday we saysee the fed come out and we have this new risk around the coronavirus, so we will look to from jerome powell as to whether this will pause the current monetary policy stance. anna: -- matt: i have a chart to illustrate the liquidity injections, which is striking, because it goes back to 2004. you can see in blue the gross
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injections by reverse repos. you can see we are at a level we have not been now. if you could see my hand, you would know where i am pointing. i guess you can see the blue line at the end of the chart. is this the reason that we see for asianvaluations stocks? we have weaker valuations for asian stocks. typically it is the case, but it is even more than normal compared to european and american stocks. >> it highlights the headwinds facing the region. the chinese economy will face a significant hit to growth in the first half of the year. whether or not it spills over into the second half of the year remains to be seen. investors still have this v shape recovery in play. and then with regards to the u.s. and europe, we are seeing
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this story of u.s. exceptionalism, growth continues to hold up. we are seeing these flows into equities. europe is a different story. we are seeing pmi gauges, potentially shifting to improvement, but we are seeing some sectors dimmitt -- da mpened significantly. china is unique with stocks keeping the valuations low on a relative basis. haslinda: i have been obsessing fromthe latest commentary economists around the coronavirus and what they are monitoring giving clues how far this goes and what it does from an economic perspective away from the human tragedy. store closures, chinese consumers, flight cancellations, supply disruption. all of these seeming quite macro things -- micro things having a
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macro impact. what does it mean with assessing how much the market will be? >> that is a challenge from a macro perspective because we are not getting hyper -- high-frequency data to hit the chinese economy. we are looking for one at the rate of transmission beyond china. are we seeing that studying? ultimately we have seen the peak virus fear behind us. other than that we are seeing support that seeing potential supply chain disruption, a lot of chinese factories going to resume operations. whether that has a spillover effect. and then looking at global tourism indicators, are we seeing a hit from his virus concerns? and then more broadly whether risk appetite will continue to be supported and we don't cnooc on effects outside of -- see
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knock on effects outside of china. matt: you can join the debate on today's question of the day which is, how far can risk assets gain on pboc liquidity injections? reach out to us and the mliv team by typing this. it will take a look at your stocks to watch, including daimler. the carmaker could be cutting up to 15,000 jobs. it has its earnings report tomorrow. bloomberg radio is live on your will device or on dab digital in london. this is bloomberg. ♪ ♪
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matt: welcome back to bloomberg markets. this is the european open. we are 57 -- 47 minutes away from the start of cash trading.
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filson ruffino is covering team viewer. we are looking at daimler and xor. let's kick it off with you. what is the story with team viewer? >> it was one of the marquee ipo's in europe, biggest tech ipo in 15 years but it stumbled out of the gate. it bounced back strongly after then. they are out with earnings and it is a mixed bag. on sales and profit in 2019 it analystd versus estimates. same thing with 2020. the forecast and is a bit ahead of estimates, the sales a bit below. the stock seems to have the benefit of the doubt. it has done well since the initial stumble. 41% growth in billings in 2019 and investors love a growth
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story even if the stock is expensive. 43 times earnings, but it will keep going higher. anna: you have got the latest from daimler. >> they could be intensifying the job cutting plan. they could eliminate more than are about 15,000 jobs worldwide when they announced results tomorrow. we heard daimler saying they would do this, upping that. this is all in an effort to save, $1.4 billion in the cost-cutting plan. people who watch automakers closely will know about xor. tell us about this story. >> they know xor because it is the italian investing group. they own fiat chrysler, but one of the things they own they are looking at selling is the reinsurance group called partner
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re and it would be selling it to a french insurer. the price tag is said to be $9 billion. we heard these talks are ongoing, but there is no uncertainty they would result in transaction, but we can report these talks are exclusive. anna: thank you very much. thank you for bringing us your stocks to watch. you can find all of the stocks the equities team are focused on by going to first go on the terminal. let's get a news update. ministers from opec and its allies are not likely to hold an extraordinary meeting to discuss the coronavirus. the meeting will go ahead as planned in march. the situation in energy markets is now stabilizing. this is after the outbreak initially sent oil prices down by more than 10%.
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and ireland left-wing nationalist party is one of the biggest winners of the weekend's election. the minister expects it will come in second with 47 seats. this is behind the other party with 45 seats that the prime minister -- almost short of the 80 needed for a majority. the final result is expected later today. in the u k, prime minister boris johnson is gearing up to announce and infrastructure spending. it will focus on the north of england and is a part of a campaign pledge. we learned the program will include a 40 million pounds for 5g wireless networks in rural areas and investment in mass transit. in the u.s., donald trump is proposing billions more in defense spending. the budget for the upcoming this willyear -- fiscal year
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see steep cuts to social programs. also on the cards, i u.s. budget -- a u.s. budget for mars. they are moving away from removing the debt by time he leaves office. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ anna: thank you very much. coming up on the program, struggling u.k. hospital operator nmc health said it received approaches from some other companies. this is bloomberg. ♪ berg. ♪
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back to bloomberg markets. this is the european open. we are looking at futures that
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are pointing a little bit lower on this monday morning. let's catch up on the stories you need to know about nmc health. they say they have held for luminary talks, takeover talks from a number of suitors. held takeover talks from a number of suitors. >> they are listed at home in london and got cross holdings into a huge natural business -- financial business. it top line on this story is was attacked by muddy waters and a demolition ensued on the stock price. this fire was lit as it were back at the end of december. the stock price down 60%. this one was worth $10 billion over two years ago. the root argument for muddy waters, the margins are too good to be true. they don't bet the insiders,
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they have questioned the insiders, questioning the margins, the debt, the cash. it must be said and mc did didond back and -- said nmc respond back and said this is not the case. they have their own investigation and launched a buyback. fbi have set up a former person to do an investigation. this morning kkr comes with a very prillaman are proposition, approaches from kkr and test very preliminary proposition, approaches from kkr and gri. it is a preliminary bid. and this person is the core owner of this vehicle, a very well known billionaire in the region. his wealth has collapsed considerably as a result of this. he has been asked, along with another major shareholder, he would be absent from the board
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discussions. the board will look at this theyach from kkr and gki, will be asked to step aside and from theeeking clarity core shareholders. what we have is a fast-moving story. muddy waters attacked, the report was this is not -- repot ste was this is not true. kkr is a huge player. they have done big deals with a major oil company, die in the adnoc. abu dhabi with they are major players in opportunity. this looks like a fast-moving opportunistic move. it is listed in london. likewise this one came under huge pressure. highly preliminary approach. anna: thank you very much. manus cranny with the story that spans the region he is sitting
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in and in london, we will watch that in 40 minutes time. germany's industrial woes show no sign of abating. afterp continues statistics of its predicting, the official predicted -- statistics predicting growth. very good morning to you. we could see contraction again in germany in the fourth quarter in 2019. is that a base case for you? >> it looks increasingly likely. a base case would be just about no growth. i guess the important point for germany is that it exposes how vulnerable the eurozone's largest economy is to global headwinds. the globalk economy in general is. an important point would be to germanalk about weak
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growth and european growth but at the same time, we are looking at a slight uptick. we were until the end of last year. this year we have seen two big events already, the iran fiasco and more recently the coronavirus. and a modest uptick will be delayed until q2 -- any modest uptick will be delayed until q2. matt: what is the difference between success and failure? what events are you going to watch to show you 20 is a year of substandard, possibly negative growth for germany, or is there a change that could help to boost german growth? >> the critical point for the german economy is global recovery. and if we see events that sort of shake our belief that the
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global economy might be stabilizing, we would have to revisit the eurozone outlook and german outlook in particular. and what could the economy be? -- recovery be? our base case is that, if factories in china open up in the week of february, the chinese growth could be around 4.5% and the damage could be contained. we are looking at -- expecting massive stimulus from chinese authorities and that would lead to a v shaped recovery. if the virus goes into more significant contraction in the chinese economy, repercussions globally could be significant. anna: we will return to that shortly with you. thank you for staying with us. the macro anti-e.u. economist at ts lombard -- and e.u. economist at ts lombard. this bank is considering
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increasing the amount it pays back. we will have the occlusive interview coming up next. futures here in europe point towards a negative start to the trading day which is 34 minutes away. this is bloomberg. ♪ s is bloomberg. ♪
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back to bloomberg markets. this is the european open. unicredit is looking to reward investors who stuck with it during the tough times. the bank said it might speed up a plan to return a bigger proportion of profits to shareholders. let's get over to francine lacqua who is joined by unicredit ceo for a exclusive interview. thank you. we were just saying in the introduction that you said you could look at providing extraordinary capital distribution. when will you decide whether to
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increase evident layouts to 50% of 2020 earnings? >> we will decide early next year, at the close of our 2020 results, whether we increase to 50% of our net income and we anl see as well if we have extra dividend to be paid on top of the 50%. francine: the depends on the execution of your business plan? >> that and the regulatory environment. it has been put in place by the ecb [indiscernible] which will bring to all european bank an extra bonus in terms of regulatory capital. francine: when you talk about the increase in pay out, is it through dividends or could it be share buyback? >> we will see. we do share price today.
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dividend makes cash -- dividend makes sense but buyback makes sense as well. francine: talk about your business plan. jean pierre: it is clearly the environment and whether the economy will remain weak or weaker. if the ecb cuts rates again, negative rates have an impact on banks. we don't think it is the case. we think the ecb will normalize. one never knows. francine: does your central-bank understand the plight of european banks? jean pierre: they are practical. on the monetary side, they interact with us but also on the regulatory side. head hasto see the new been very transparent about regulatory headwinds which is a plus for investors. the have a bit of visibility for european banks. we should bring more capital in. work? e: does tiering
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jean pierre: it does a little bit. i think negative rates in general is an issue if they stay lower for longer. francine: what is your take on the italian been -- italian landscape overall? jean pierre: i think they have made a lot of progress in the last few years. we reduced our nonperforming in three0 billion years. that is quite a large amount. all of the banks made progress. the system is in better shape, ready to finance the economy. francine: italian banks outperformed european banks since the beginning of the year. why is that? jean pierre: because they are good. francine: is there something out? jean pierre: people can see the overall framework in italy might be more stable, a country that
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has a lot of assets and positives. very competitive, and the population which is consuming in which is a wealthy population. overall good prospect for italy and its economy. i think it will be technical and more positive. francine: do you think there will be consolidation among the populari banks in italy? jean pierre: we think -- it is very clear. francine: two rumors about the validation make a difference to your strategy? -- do rumors about the validation make a difference to your strategy? jean pierre: it does not. we work on our organic plan. in the current environment transformation of a bank is much more important than acquisition. francine: i was asking you less time what would trigger m&a tiered banks.
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jean pierre: the regulation is improving and they want to be more transparent about the impact of regulatory headwinds and regulatory evolution. no m&a is coming from two things. transportation -- transformation is the most important thing for banks today. and share price in general, it is difficult to consider any combination which can be [indiscernible] banksne: are european strong enough to withstand a fight between london and the rest of europe? jean pierre: they are. european banks could build up their capital. profitability is on the rise. consequencessome which are more technical than anything else. on the clearing side, the equivalence of the contract. these are technical issues which would be sold.
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francine: when i asked you the biggest risk to your economy, it you -- is there anything? jean pierre: for the moment we haven't seen any impact of the virus. we of course with the exception to protect our team members and to make sure we are for a plan we our customers, we seem -- have seen if it is impacting in the future but no sign of it at the moment. francine: where could the biggest risk come from? jean pierre: it is lower growth for longer, which for western europe we mean lower rates for longer as well. that would be an issue for the banks. this is not our base case. but is a risk we have to be mindful of. -- that is a risk we have to be mindful of. francine: is there enough political capital to push this through? jean pierre: the banking union is not about having a single
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insurance scheme. it is making sure the banking sector in europe is seen as one sector. people investing u.s. banks, not the state of new york or california. when they look at europe, they invest in an italian bank or german or french. they don't look at european banks. the banking union is making sure we have european banks. francine: do you think there is a push in germany to put the money where they said they would do it and go through with it? jean pierre: i think it is unlikely we will see a banking union as far as the european deposit concerned. francine: talk to me about regulatory hurdles. have we seen the biggest burden when it comes to cost and regulation? jean pierre: we have seen the said, they have
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been very clear and transparent about what they are. visibility and understanding about this regulatory insulin -- evolution, it is key and the ecb is going in the right direction. it is perfect. francine: when you speak to investors, what do they ask about the most? jean pierre: distribution, increase of pay out to 50% last year that we might consider in 2021. i think it is important for investors. of course they look at the development of finite credit. we finished our first plan and increased our written liquidity by was three times. increased -- they are looking at us being sure we can deliver our new plan in 2023. francine: the chief executive of unicredit. back to you.
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francine lacqua with the ceo of unicredit. coronavirus deaths exceed the total from sars and the who says this may be just the tip of the iceberg. we discussed the global fallout of the outbreak next. this is bloomberg. ♪
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matt: welcome back. less than 20 minutes ago for cash equities trading, looking , gettingd rose slighter. now -- read arrows. down less than .2% on the major equity indexes. what you should be looking out for this week, it starts really tomorrow. the second test in the race to become the democratic candidate in the u.s. election kicks off with the new hampshire
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democratic primary. and jerome powell deliver his semiannual policy report to the house financial services committee. anna: that is something we will be watching wednesday. nato leaders with a meeting in brussels and then tidjane ceo of last report as credit suisse. and we will have the munich security conference. north korea is sending its first ever delegation. secretary of state mike pompeo will attend and iran's prime minister -- foreign minister scheduled to make an appearance good let's get a business flash. -- appearance. let's get a business flash. reporter: a 50% increase over 10,000 cuts it has already outlined. the paper said the plan will save more than 1.4 billion euros. daimler wants to reduce investment in lossmaking
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projects outside its core business. the credit suisse chairman isn't afraid of being ousted. newspaper after his battle with tidjane thiam here he has faced all to resign from some of credit suisse's biggest investment. people dispute who was to blame for the spying scandal that hit the bank. php, the world's top minor, is with -- is in talks we'll have learned -- more flexibility on deliveries. that is to discourage them from declaring for measure. thank you very much for that. the global death toll from the coronavirus outbreak has reached 910 with 40,000 confirmed
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infections in china. the director general of the world health organization says we may only be seeing the tip of the iceberg in terms of the spread of the i digress -- the virus. our guest is still with us. it is clear this could be the tip of the iceberg especially if these viruses don't start showing symptoms or the people that have them until two weeks after they get them. we already see almost 1000 fatalities here in what is likely to be 300,000, 400,000 viruses spreading quickly. what economic effect do you expect? the first point is there is a huge amount of uncertainty. i will not make strong claims where we see global growth going
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, determined by the outbreak. we don't really know the extent of the outbreak worst and we don't really know the extent, -- outbreak first and we don't know the extent to which chinese companies will be closed. we can make some scenario analysis. the base case is chinese -- the rubyll open stimulus and there will be recovery and chinese economy. it will have repercussions globally. the main important point is what are the interlinkages with the global economy. one is trade and the other sentiment.critical, if it impacts sentiment, it is related to a strong dollar, which is punitive for global financing conditions. the inversion of the curve is an important metric to watch because that is critical not just for the u.s. financial
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conditions but repercussions globally. the point i would like to emphasize is these factors tend to reinforce. the longer the shutdowns continue, the more protracted of theense repercussions global economy will have. anna: it is interesting to hear what the who is saying. very negative message. looking at globally confirmed cases, there are perhaps some reasons to be more positive, given the rate at which infections, maybe the rate of infection is slowing down. we have to take the data as we find it. there are questions about it. if we are looking at europe and the vulnerability, how soon do we see them start to show up? what are the data points you are looking to? >> the impact from q1 itself.
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because of chinese new year, the timing of the chinese new year, we won't have clarity on how intense the drag on growth has been. we will have to wait until q2 to assess the impact on q1. indices like pmi, market indices would be important to watch. manufacturing and indexes. and the european commission index would be an important one to watch. the credit and money embers are more timely and can carry cash money numbers are more timely -- the credit and money numbers are more timely and can carry. i will not make the same i know how intense these repercussions are. wait and watch. matt: there is more certainty when you look at the trade situation. how do you assess not? -- assess that?
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will the negotiations continue between the u.s. and china and the peace hold between the u.s. and europe? >> the phase one trade deal leaves a lot to be desired, but they have given a framework. this framework how to approach the u.s.-chinese dialogs in terms of trade dispute. our team thinks the repercussions of the trade negotiations will continue on a positive trajectory until the u.s. elections. after that, who knows. we have been here before and there has always been progress and then several steps back. we have got to be very careful but our base case is for these negotiations to cut until the end of the year. anna: we talked about the european growth story and germany. what about the weak spots in
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europe? ? at do you worry about the italian gdp is the worst since 2014. and they say gdp will be low this year. that is before you factor in unknowns around the coronavirus. where the weak spots? >> italy is the weakest spot in the eurozone. germany is not doing that great which is why we worry because germany is europe's largest economy. there are strong inter-linkages with the eurozone. -- within the eurozone. germany is struggling and has repercussions on other economies. italy is something we worry about the most but less so than before because the political uncertainty is not that entrenched. but we are looking at another election this year. i could add more vulnerable to -- that could add more
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vulnerability. anna: thank you. economist at ts lombard. fornd 10 minutes in fact the european open. mount -- markets bounced back. deutsche bank strategists are warning the quotes will imply any selloff. this is bloomberg. ♪ ♪
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>> last week we have seen a few days now in which the numbers have declined, the reported numbers of both confirmed and perspective cases has collectively declined for a few days, with one day exception. , in these cells -- in
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themselves the numbers mean nothing until enough time has passed beyond the incubation period of the disease, but we are glad to see them go down. matt: that was the world health organization's were presented of speaking to -- representative speaking about new coronavirus cases. in ireland the left-wing nationalist party is one of the biggest winners of this weekend's election. another party says it will come in second with 37 seas. that is behind a party with 45 seats. this ahead of the prime minister's party. all our short of the 80 needed for a majority -- are short of the 80 needed for a majority. the big winner at the oscars was parasite. it one best picture, making it the first foreign linguist film to win in the category and took home three other awards
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including best director. others included -- other big winners included joaquin phoenix and renee zellweger. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: markets may have bounced back but strategists are warning [indiscernible] will and ball flight any -- will amplify any selloff. >> always the selloff -- always the culprit. markets came falling back. according to deutsche bank strategists, both discretionary and systematic traders hold a lot of equities. the threat is always because they own so many stocks, there is not much room to go further or higher, and there is not more threat for them to sell. controlledlatility
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funds, ones that buy and sell first on -- based on volatility, they estimate that if the s&p falls by 2%, they will sell into the market $5 billion worth of stocks. , they used to be long oil and copper but they have flipped commodities, considering the recent market action and our short, both of them. short, both of them. we have a headwind for the commodities. matt: thank you. dani burger with your morning call. some of the other stocks to pay attention to today include atlas cop go. that company is bidding 50 euros a share for its revision, according to a statement released earlier. they switched the revision here in germany, and the offer is 43% premium, so you can expect to
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see the shares jump. this is the trade gate quote, but in the live trade they will likely grow. the open in four minutes time. this is bloomberg. ♪ sometimes your small screen is your big screen.
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every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. anna: one minutes ago until the start of test equity trading's. tip of the iceberg. the who warns the coronavirus outbreak could get much worse as the number of deaths exceeds the total from sars. unicredit ceo says the lender has not felt any impact from the coronavirus so far. he says the biggest risk is lower growth for longer. we will bring you more from that exclusive conversation. muddy waters. it received preliminary takeover approaches from kkr and gk investments. matt: we are looking at futures that are pointing to slight losses here. about a quarter percent on the
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euros stoxx 50. quarter percent for dax futures. week last a fantastic week for the cash equity trade we have for example on the s&p 500, best week in eight months even as this growing coronavirus seems like it should be scaring markets. we are going to look at the open now. what do you see coming out of the gate? anna: it looks from the futures we are expecting to see something negative. a little bit of catch-up in europe with regards to selling. that is part of the story but keep an eye on the seemingly conflicting headlights coming through. a big supplier for apple. market sentiment in the near term with regards to their ability to come back and open up factories in china. those conflicting headlines leading to sizable moves in u.s. futures. we have seen u.s. futures now looking fairly flat in the last few minutes.
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buy 1/10 of weaker 1%. we look to that with interest when we see the ftse 500 is not down. still all of these markets in europe down by around one quarter upper -- one quarter a percent. let's look from the sector perspective. it is a negative session so we will expect to see predominantly red on this graphic and we do. financials look to be a little bit of divergence. i.t. businesses a little divergent. telecom and staples. read on health care which is interesting considering the ongoing negative headlines of coronavirus. it is now killed more people than sars. the market focuses on the coronavirus and the extent to which chinese businesses can come back to work this week. that will be a big driver of markets sentiment with these conflicting headlines. what do you see from the individual movers? matt: if you look at the winners
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versus losers, 400 and change down this morning. 127 that are rising. about 4:1 risk to the downside. take a look at who is adding the most points. right on top. a name you don't typically see but up 4%. this is the holding company that ferrari, chrysler and but also the insurance company that is being sold for $9 billion. john elcon, the chairman come about that for $6.9 billion so he's making a pretty profit just a couple holding years making this company. nokia is a gainer. more than 1%. exor, nokia -- typically they are not names. wirecard and daimler adding the most points to the stoxx 600. not the big names at the top, it
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is the smaller movers. take a look at the losers here, taking the most points away. onlyf the biggest stocks, down half a percent but it is so heavily weighted that it drags on the index. santafee, s&p and linda. we are kicking off european markets. lower. onwhen economic activity may rebound after the hit from the coronavirus. also selling after what was an incredible week. i just looked back through the stoxx 600. last week was the best week, up 3.23%, since november of novembe2018. even though we have this care about the coronavirus spread, equity prices were running higher and higher. joining us is roger jones, head of equities at london and p to thank you for joining us.
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does it make sense to you we had such an incredible rally amidst all these fears about coronavirus, trade issues, brexit? why? roger: good morning. i think in a word, no, it does not make sense. it was a crazy week last week. the week before, we saw a selloff in equities but then we overtook where we were be hand -- beforehand. there's a clearly a lot more risk now in the short-term for equity markets which could develop into medium-term risk. we don't know that yet. the markets are still trying to ascertain how deep this goes, how much of an impact becomes. i think in terms of the rebound, it did look a bit exuberant and talks to live at investors waiting a long time to deploy money into the markets. anna: good morning. i am looking at where we are in the u.s. 10 year right now. 1.58%. just how low that goes.
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how much continue appetite will investors have for the safety of fixed-income assets? roger: quite a big disconnect with bond markets rallying as well. bond markets have rallied very strongly this year. 10 year yield continued to go lower. 1.5%. hasink the appetite contrasting pictures at the moment. there's clearly a bit of concern, risk off. at the same time, think there have been investors that have been waiting to look into any setbacks to get back into equity markets. matt: so, how do you expect then 2020 to go? if that continues and we start to climb the sort of wall of worry, we could still have a long way to climb this year. roger: absolutely. we could continue to go up. again, i look at this, the fundamentals are not particularly great.
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i think we are struggling to see earnings growth coming through. the equity environment looks pretty challenging. we are seeing areas that are struggling. it needs work in the short term with the virus. i think valuations are pretty high. we are vulnerable from that point of view. gone fromry and has being pretty negative towards equity markets to now being positive. a lot of investors are overweight. i think that puts caution into markets but you are right. given the momentum, the price momentum at the moment, this continue -- could continue. as this does continue, our advice is to sell the rally and take some profits. anna: is that because you think there are parallels with other. of irrational exuberance, early 2000's? those comparisons are always pretty imperfect. roger: they are imperfect but
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there are some similarities to 2000. the biggest similarity and take away is what we saw in that time was a great. period for asset prices. as set price-performance massively outstrip the performance of the real economy and we are seeing that again this time. since the financial crisis, asset prices -- the context of that, last year we saw virtually every asset class move higher while at the same time the global economy has really struggled. the real economy is going nowhere. matt: i was thinking about this this morning and i asked hillary to put a chart together for me. if you look at the five years until now, you can see this white line. we do continue to rise but it is nothing like the five years through february of 2000. there is a steeper gain at the time. it is interesting to think of the comparison that way.
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you could also look at it in terms of valuations versus gdp growth. there's a number of ways you can do it, but definitely something i think is important to pay attention to. roger jones stays with us. let's get the bloomberg business flash in london. >> thanks. dialect could announce as many as 15,000 job cuts according to -- a 50% increase over 10,000 cuts that have already outlined. it will take more than 1.4 billion euros. daimler wants to reduce investment outside the core business. credit suisse's chairman says he's not afraid of being ousted. he spoke to a swiss newspaper after his boardroom battle with the outgoing ceo. he has faced calls to resign from some of credit suisse's biggest investments. a number of their backing in the dispute over who is to blame for this buying scandal that hit the bank.
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french insurer is an advanced itks with exor to buy -- could pay as much as $9 billion in cash for the reinsurance business they are ongoing it may not result in a deal. airbus is in talks to buy out from barnier stake in the a-220's jet liner program. negotiations are at advanced stage at a deal could be announced this week. within $6 million in the a-220 before ultimately ceding control to airbus. that is your bloomberg business flash. anna: thank you very much. next, how big an impact could negative rates have on european banks? we will bring you our exclusive interview with unicredit's ceo. we heard from them a moment ago. we will bring more of that conversation. this is bloomberg. ♪
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anna: welcome back to european open. 12 minutes into the european equity session. catching up a little bit with what happened in the u.s. on friday and factoring in the next headlines around suppliers to global technology in china, when
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they can come back to work this week. that seems to be an open question for markets. that's get back to the banking question because unicredit ceo jean pierre mustier says negative rates will become a problem if rates stay low. he spoke to bloomberg. john pierre: negative rates have a very big it profitability of banks. we don't think that is the case. think the ecb will normalize. anna: walter jones -- roger jones is still with us. i am guessing, you have given us a list ahead of our conversation. thanking does not appear on their. a low interest environment, one of the reason not to load up on bank stocks right now. roger: that is certainly been the reason and has not helped the european banks sector. we have seen that elsewhere where there has been a reluctance from the bank of england, federal reserve when times are tough to go to negative rates. i don't think any countries that went to negative rates have --
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it has reversed and looks to have more normaal policy. i think the unintended consequences that we have seen in japan have been quite fast and misunderstood. matt: do you think we will be able to get out of negative rates in europe? roger: that's the difficulty. we still have a very low growth environment, low inflation and grime and paid it does not look as if the rate policy will stimulate. i guess the question will be if this is actually worthwhile, does this make sense? not just the real headwind for the banking and financial systems of europe. do we actually take the step forward and say yes, ok, growth is slow, inflation remains low but what is the point of having a negative rate in terms of the implications for it and the lack of stimulus it brings? anna: looking at some of the weaker performance on today's
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equity market session and we have bank of ireland, the biggest follows on the stoxx 600. bank of ireland down by 5%. featureg nationalist do in coalition talks, this is something that makes the banking sector nervous. roger: absolutely. friendlyuire a fairly government approach in terms of their outlook for profitability. brexit fits in this as well in terms of the discussions and impacted can have on the irish economy and the irish banking stocks are directly influenced by the irish economy. looks more of a representation in terms of irish politics. it is going to be a headwind for banking stocks. matt: how do you expect frexit to play out? do you think you will get a deal this year? roger: i am not sure we will. there's a lot of details to really be finalized.
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i'm not sure that matters. i think it is much more around the dialogue and how the discussions go. if it is this year or next year, as long as there is progression and steps forward in terms of coming to a deal, there's going to be very difficult areas. predominatelymy, and thoroughly can still make gains if we get that positive sort of map and dialogue between the eu and u.k.. anna: u.k. equities could benefit? roger: they could benefit. there is headwind especially from the multinational overseas likers but i think areas the u.k. small caps looked very left behind from where they have been. quite high quality businesses also. mid-caps have been a lot stronger. i think in terms of when we look back to 2016, the u.k. has been a huge laggard and in late cycle
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markets, we get these catch up. peirriods. anna: roger jones, thank you. this monday. up next, we will bring you the stocks on the move, including mmc health. it has received preliminary takeover approaches from kkr and gk group. private equity going after this business which was previously be not by muddy waters. we will get to that story next. this is bloomberg. ♪
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matt: welcome back to the european open. 20 minutes into the trading day and we are looking at red arrows across the equity indexes. they are all down. about two to 3/10 of 1%. let's get to the individual stock movers that are driving those changes. we go to annmarie hordern. annmarie: i want to start on the upside. nmc health up 3%. this comes as they are getting up preliminary approaches for a takeover from kkr and jk investment holdings. it has been a rough few months for nmc. they have been the target of carson block as a short sell. some positive move for them. saying in exclusive talks.
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covea, one of the businesses from exor for $9 billion in cash. bank of ireland falling more than 5%. we are seeing a lot of irish banks under pressure this morning and it comes after the weekend election. the nationalist party really take advantage and outperform. they have some left-wing policies and that is hitting the irish banks. anna: thank you very much. annmarie hordern. the ecb still has tools necessary to help the economy, according to the central bank vice president. they include cutting interest rates further and debt purchases. admitting that the side effects of lose policy are increasingly evident. joining us now is the chief european economist that goldman sachs. goldmathank you for joining us. let's leave aside the coronavirus and impact, the
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uncertainty that creates and assess where we are at this point in terms of the european growth story and the tools available for central banks. we heard comments about the tools available to the ecb should they need them. how do you assess the toolbox at this point? >> first of all in terms of where we are in the cycle, we still think we are near the trough in the european growth cycle. said newgh as you risks have emerged that we need to think about. if we look at some of the forward indicators, for example the january surveys and indicators in germany, those have ticked up. this update is still weak. we have weak industrial production data. we think some of these things look a little better. now for the ecb, with think it is most likely they will stay on hold. said, afacing, as i
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little bit of an improvement and growth outlook. some of the risks around brexit, around the trade war have receded, they have not gone but some of the inflation numbers, still only a bit above 1%. we are seeing a little bit of upward momentum. our baseline is they are on hold and focus on the strategy this year. if things turn out worse than i described, with think they have tools to respond. matt: what do you mean by that? do you think the ecb cutting more is going to help drive growth or inflation? do you think the ecb buying more will help drive growth or inflation? jari: as i said, we think in the baseline, they are on hold and don't need to do these things. matt: do you think they have the tools -- so what tools with the use? that haven't worked so far? jari: there is evidence the tools have worked.
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they come with side effects but we do think they have been successful in recent years. i think the first tool they have is to cut rates somewhat more negative. we think the effective lower bound is -1%, giving them at that a room to cut further. not a lot but a little bit more. i think that would be the first line of defense. beyond that, they could still raise the purchase pace which probably would need to come with an increase in the limits they have imposed themselves. with think that would be feasible. they get extend the sovereign program but beyond that, they could go into other assets, buy other assets at other central banks. with think the hurdles were doing so are still pretty high. anna: where do you see the bank of england going? economicsing uber saying they are likely to see a rebound in gdp growth in 2020.
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is that your view as well? are we likely to see a postelection rebound? towards the end of the year, brexit and the futures trade deal will loom large. view we agree with the that growth will get better. growth underperform sharply the u.k. relative to other countries. we think a lot of that has to do with brexit uncertainty. we think there has been progress on that front. it is not decisive but with think the risks of a no deal outcome has calmed down. we look at the data. what we have seen is very weak data. then, a pretty significant improvement in the data in january. so far, that is only survey data. as mark carney said, we have to see the hard data actually backs the survey data. we think the growth will continue to move up from here,
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driven both by reduction, uncertainty and buy more expansionary fiscal policy which we look for. matt: what your expectation for the financial industry? do you think it's going to stay mostly anchored in the city? jari: well, i think it is a little early to tell. i think the key bit of negotiation is first going to focus on goods. we think there is scope for a relatively limited trade deal on goods this year, which buys sometime for more negotiations on the services side. i think it is pretty clear that the u.k. will end up a lot further away from the eu than in the past. and, we don't know exactly what that new trading arrangement will look like. anna: you are right. march 11 is when we get the first u.k. budget.
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jari, thank you very much. jari stays with us on the program. up next, coronavirus debts exceeds the total of stars. we will get an update. this is bloomberg. ♪
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anna: welcome back to the european open. 30 minutes into a trading day. i'm anna edwards at the european headquarters of bloomberg alongside matt miller in berlin. the european equity session a little negative this morning. matt: a little bit off, but keep in mind, last week we have the best week for european stocks since november of 2018. stoxx 600see the coming down a bit. but it does not take away from the gains we saw last week. wow, we are getting a huge german political headline across the ticker.
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you may have expected it if you have been following german politics. break away from the stoxx 600 bauer,ok at kramp-karrena she is going to step down as the leader of the christian democrats, of angela merkel's party. she has been in office for about a year now, a little over a. she is going to step down -- i'm sort of making up my own reason here, but i am guessing she is going to step down because of her failure to properly handle the election scandal. if you remember last week, there was a lot of concern about a her partythe -- not being elected the state premier of -- with the support of the cdu, her party, and the support
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of the afd, the far right party. he eventually gave that office back and they will hold new elections now but it took a long time for the cdu to really come out against the support of the afd. in some ways, they haven't yet. she is going to step down after a number of gaffes that led up to that, but mainly after her mishandling of -- or her failure to handle the election scandal quite as well as angela merkel did when she got back from a trip to africa. we will keep you up-to-date on this. a developing story and german politics. for the time being, let's get over to london for the first word news. >> thanks. the left-wing nationalist party in ireland is one of the biggest winners of this weekend's election. it projects it will come in second with 37 seats, that is behind 45 seats for the head of short ofister's -- all
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the 80 needed for a majority. the final result is expected later on today. in the u.k., prime minister boris johnson is gearing up for an announcement to boost infrastructure spending. it will focus on the north of england and it is part of his campaign, to follow through on campaign pledges ahead of december's general election. the program will include 40 million pounds for 5g wireless networks in rural areas and investment in mass transit. a little bit of glitz and glamour. the big winner of last night's oscars was parasite. it was the first foreign language filled in history to win best film. it took home three other awards, including best director. other big names of the neck anduding joaquin for joker renee zellweger of herbert trail of judy garland. than 1400
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analysts. this is bloomberg. anna, matt? matt: thanks very much. your first word news. the global death toll from the coronavirus outbreak has reached 910, with over 40,000 confirmed infections in china. cases traced to a business meeting in singapore now have reached three european countries and that raises fear of a so-called super spreader event. the director general of the world health organization voiced concern over the spread of the virus among people with no travel history to china. he tweeted we may be only seeing the chief of the -- tip of the iceberg. stephen engle joins us now with more. we are seeing a lot of big numbers here. are we seeing any signs that the containment efforts are working? stephen: i think in china, the
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containment is an admirable effort, obviously. you have more than 40,000 confirmed cases. the world health organization's china head was on bloomberg television today and they were slightly encouraged that the number of new cases on the daily basis was not going up at the same pace. almost 3000 new cases from yesterday today. keep in mind as well, the extended lunar new year holiday period has ended and officially workers are supposed to go back to their factories and work starting today but that is a logistical nightmare considering wuhan is the junction in the middle of china for all north-south trains and east-west trains. you might have the opportunity of spreading it even further after those initial containment efforts. and then there is the containment you have to look at abroad. you just mentioned the super
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spreader possible case of singapore to europe a look at what is happening in the japanese cruise line. own internal ecosystem where it is spreading. anna: we are keeping a close eye on the diamond princess that remains quarantined in japan. the japanese health ministry saying 60 more people have tested positive for the new virus among the 3007 hundred passengers and crew on board the ship. we will keep an eye on that. our getting a clearer picture of the economic toll? it is endlessly premature to be asking this question as we have not gotten the size and scope of the virus. stephen: absolutely. you are seeing various different economic indicators showing there's going to be some pain. which,the cpi number expected, the numbers went up sharply because of the high food and pork prices, exacerbated by the african swine. the coronavirus did not help the matters. the fastest pace oin eight
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years. 10 different gauges tracked by bloomberg to assess the help of the global trade situation are all trending below the midpoints on a historical basis. ubs among others saying first quarter growth will be 3.8%. i see dire predictions down to zero, especially if this goes out to 5, 6, 7 months long. anna: thanks very much, stephen engle from hong kong. jari, chief european economist at goldman sachs, still with us. i was reading analysis from capital economics, they think the 43 coders of goebel growth are now at risk because of the virus. that is a very bold statement. global perspective, what are the numbers you've got so far? jari: first of all, we have to say the situation remains fluid and highly uncertain. it is very difficult to gauge
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with confidence where we are headed from here. i think what is clear is we will see a sharp, significant hit to first quarter activity, particularly in china where we now look for no soweto growth quarter order recorder. -- quarter over quarter and there will be spillover towards the rest of the world both by trade and terrorisourism loss. that hit might be something half a percentage point on an annual basis, which is a pretty significant hit to the first quarter. beyond that, it all depends on how the virus evolves. i will not take a view on that. but if you assume that the virus is contained towards the end of the first quarter, you should see a pretty meaningful rebound growth in the second and in the third quarter. so, that is our working assumption for now which then leads you with a somewhat lower
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growth for the year as a whole but still showing some improvement relative to last year. anna: if you are looking for clues, because all economists seem to be trying to find the data points that will show up, that will reveal the impact this is already having on the chinese economy. you are looking at australian pmi, hong kong import data. what are the data points you will be looking for from a european perspective to gauge how much impact this is having? jari: i think you want to look at all of those things. i think the problem is we will not really have any proper data for another two weeks. really areata points in the third week of february. will look to what sentiment hit might have come with it. in addition to that, the trade data is going to be hugely important. to ease asian trade data in
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particular which tends to report first. of course, in the meantime, we can look at a lot of these experimental data points that are very noisy but you can look at tourism flows, passenger traffic, electricity consumption and so on. that data so far does show pretty significant hit to activity in china and the region. ask youwonder -- let me your take on what's going on in germany and whether it could have any impact economically. we don't see it playing out in arkets, but -- some way problematic leader of the cdu since she won the election. she attempted a coup against merkel that failed miserably. she had made some gaffes in public and now she had this huge problem. does it matter? in the sense that the leadership of this country has we even
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further, i guess it is not helpful? jari: it is a significant developments, of course. isyou said, in some ways it not a huge surprise because she had been under a lot of pressure over the last few months already. now of course, we need to see who might succeed her as head of cdu. as far as the broader implications, economic implications are concerned. i would say, it is fairly limited. you could say if anything, it lowers the likelihood of near-term elections in germany the need to find a new leader of the party. our baseline remains that the grand coalition stays together through at least 2020 and we look for elections may be in early 2021. i think for a significant change on the fiscal side in germany, i
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think you would need to see a change in government that would be much more open to spending money than the current grand coalition. matt: it has been a great pleasure having you today. thanks so much for coming in. the chief european economist at goldman sachs talking is through a number of the biggest news issues of the day. the biggest market issues of the day as well. unicredit's big payout. the bank is considering boosting the amount it gives back to investors. we will give you the exclusive interview with the ceo of next. this is bloomberg. ♪
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anna: welcome back to the european open. 45 minutes into a negative trading day for european equity markets. u.s. futures negative as well. let's talk about the banking sector. jean pierre mustier says the biggest risk is rate staying lower for longer. he spoke exclusively to francine lacqua about the impact of the ecb policy, the italian banking center and possible m&a. jean pierre: whether the economy will remain weak or weaker, if the ecb cuts rates again, negative rates have a very negative impact on the profitability of banks. we think the ecb will normalize. have you had
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discussions with european central bank? do they understand the plight because of negative rates? jean pierre: in order to exchange, on the monetary side when they interact with us. it was on the regulatory side. been veryad has transparent about headwinds which i think is a plus for investors. they have better visibility. we should bring more capital into european banks. francine: does tiering work? jean pierre: it works a little bit, because it has a little bit impact of negative rates. i think negative rates in general is an issue which stays lower for longer. francine: what is your take on the e italian banking sector? sectorerre: i think the has made a lot of progress in the past few years. the nonperforming loan by 50
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billion in three years. that is quite a large amount. all the banks made progress. the system is in better shape. francine: italian banks i think outperformed european banks is the end of the year. why is that? jean pierre: because italian banks are very good. francine: was there a discount before that people now see value in? jean pierre: i think people can see value in italian banks and the overall framework and italy might be more stable right now. it's a country which has a lot of assets and a lot of -- very competitive which are very good. the population, which is consuming, a wealthy population. good prospects for italy and the economy, despite negative gdp last quarter. i think we are positive. francine: will there be consolidation among the banks in italy? jean pierre: that is not for me for comment.
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no m&a for unicredit. francine: do rumors about consolidation make a difference to your strategy? jean pierre: it does not. for us, it is very clear. no m&a. we work on our organic plan. in the current environment, transformation of the bank is much more important than acquisition. francine: last time we spoke, i was asking what would trigger m&a and you told me the share price. is that still the case or is there something else on regulation? jean pierre: regulation is improving these these and -- be --nd the ecb wants to no m&a is coming from two things. one is transformation is the most important issue for banks. of course, the share price which is low for the european banking sector. in general, it is very hard to consider any combination.
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ceo: that was the unicredit jean pierre mustier speaking to francine lacqua earlier this morning. here's what you need to know today. the oscars took place in los angeles, of course, this sunday and during an evening devoted to honoring the best, south korea's parasite was the big winner. annmarie hordern has a rep. annmarie: not just a big winner but they made history. the south korean comedy won best picture, making it the first foreign language film to win hollywood's most coveted award, and the director joked after he won the best international film category, saying he thought he was just done for tonight and could relax. he went on to win best director as well. this win for a foreign film is really breaking from tradition at the time when the academy is under fire for failing to diversify its ranks and awards. it is also a blow for netflix.
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netflix was aggressively campaigning many of the top awards and garnered the most nominations of any studio with 24. it only picked up two wins. the oscars was really playing out a showdown between old hollywood and the new one. matt: thanks very much. tying the oscars to a stock for us. up next, the upheaval in german politics continues. stepping down as the head of the cdu and says she will not run to replace angela merkel as the chancellor. it is a major development after a huge scandal in this country. we will bring you all the details. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. 50 minutes into the trading day and we've got really a seismic shock here in german politics. kramp-karrenbauer is stepping down as head of the cdu. she is not looking to get the chancellor candidacy. joining us to talk about this is chad thomas, our western european managing editor. it was a huge scandal last week when the afd back to the same candidate the cdu but that was
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not the first thing that has happened. againsta mini coup merkel earlier in her run last year. chad: she's had a number of gaffes. she has been in power for just over a year now and it has been quite clear and discussed in berlin that she was very weak as party leader and the events of next week -- last week bore those out. it took merkel returning from a trip from africa to bring everybody back in line politically in germany. nonetheless, this was a stunner this morning, this statement from her that she is stepping down both as leader of the party and will not run as chancellor. she says she will stay on to oversee things, but now it is an open field who will run from merkel's party to replace her in the next election. anna: what are the bigger implications of this in terms of the electoral map of germany, the coalition in moment?
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what are the biggest takeaways? akk: one of the things that says in her statement is there a real divide in her party currently about how they work or don't work with the far-right, the afd, and also whether they should cooperate with the left party, the former communists in germany. she says she's against doing both. there are some interparty for more on the conservative side and say they are in some cases and might make sense to cooperate on some level with the far-right, with the afd. it really depends who replaces her as party leader, what direction this party is going to be headed in. there are a number of names, circulating people that are interested in replacing her previously because she is so weak. we don't know who in the end will be a candidate, but it is likely going to play out very quickly here in the next couple of days. matt: the horse race is the interesting thing to see if he
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comes back. chad: he just stepped out from his position and blackrock last week, saying he wants to get involved. it is likely he will be a candidate. matt: you have a young and successful health minister who was very strong in the party. the cdu, buter for for possibly the chancellor, you've got markets odor who has been very -- marcus soder. chad: it will be interesting to see how this plays out. also the prime minister, the biggest group within the cdu, from a number of members. laschet,is armin someone who's a potential candidate. it will likely we will have four or five people throwing their names in the hat, and some people who come up as candidates now that is wide opened who may not have done so in the past. matt: thanks very much for joining us.
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i know you are incredibly busy on this developing story. chad thomas is the managing editor, bureau chief for the western european coverage. that's it for the european open. ance."t, it is "surveill we are headed over to bloomberg radio. ♪
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francine: the leader of angela merkel's cdu steps down and says she will not run to be germany's next chancellor. tip of the iceberg, the world health organization talks about the spread of the coronavirus. unicredit's chief executive says low rates are the biggest race to new banks -- biggest risk to new banks. >> we don't think it is the case. the ecb will normalize.


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